October 08, 2007

Second Life: Virtual Worlds and the Enterprise

(Susan Kish has been working with networks and communities for over 10
years. A PDF version of this essay, completed with a glossary and a
bibliography, is available for downloading - see at the end.)

When you raise the topic of Second Life (SL) in a conversation, you usually get one of two reactions: 1) Dismissal as “just another game”, “people should get their first life together first”, or 2) Rapt attention as questions start pouring out, and opportunities and risks are explored.How should enterprises look at Second Life and, more generally, at Virtual Worlds? Is the topic still too early or too distracting from “real business”? Or is SL actually close to the tipping point where, like so many technologies before, it will flip into the mainstream with unanticipated results? Second Life is a synthetic world, a 3D online simulation where you "walk" (slow) or "teleport" (instantaneous) around in the shape of an avatar - a computer representation of actual people, in lifelike form - and can interact (through messaging, voice or video) with others, buy property and build buildings, shop, listen to music and much more. It's not a game: it's a social space. To get there, you go to secondlife.com and download a piece of software. It's free as long as you only want to "walk" around; you have to pay to buy local currency (the Linden, which is convertible into real dollars) or to buy virtual land (so you can build, invite your friends over, set up a shop, or resell).

This essay looks into these and other questions relevant to businesses in relation to the emergence of Virtual Worlds. We consider here particularly Second Life as the most important and fastest-growing, but there are several other similar entities.

1) CONTEXT

Second Life can not be looked at in isolation, or you will miss where it’s going. Our emerging future will include three separate kinds of “worlds” – the Real World, the Digital World (2D Web, Internet), and the Virtual World (3D Web).

Under the umbrella of Virtual Worlds are emerging universes, ranging from MMORPGs (massive multiplayer online games, such as World of Warcraft), and Metaverses (Virtual Worlds that are primarily social vs. game oriented, such as Second Life), to MMOLEs (focused on learning and training environments), to Intraverses (putting up a virtual world inside the corporate firewall), to Paraverses (often also called Mirror Worlds, such as Google Earth).

If we evaluate these technologies in terms of their evolution, we see that Virtual Worlds are a topic today because of a combination of advancements in software (graphics, web 2.0 communication), hardware (PC's computational and graphic capacity), and infrastructure (broadband networks) to list a few. South Korea is already seeing the power of that combination, with 95% of homes on 40 MB broadband -- which explains why digital and virtual worlds are ubiquitous there.

If you view these technologies in terms of technology adoption frameworks, such as the Gartner Hype Cycle(see image), standard patterns emerge. LucasArts launched the first of these worlds, Habitat, in 1985, and closed it down within 3 years. However, the two decades between the launch of Habitat and that of Second Life in 2003, are a classic gap between the introduction of a technology, and when it matures to a level where mainstream adoption is close.

Since Second Life’s launch, we can identify another Hype Cycle. Enormous media coverage in the autumn of 2006 and early 2007 meant a huge take up of the site – from 1 million members in October 2006 to over 7 million today. Meanwhile, the hype was brought into serious question as analysts such as Clay Shirky questioned the genuinely active number of members in Second Life (currently largely under 100'000 at any given time) vs. the curious experimenters who went and registered as members once, and have yet to return.

2) PEOPLE AND VIRTUAL WORLDS

Virtual Worlds are fundamentally immersive, visually compelling and highly social experiences. Trusted relationships, both personal and professional, emerge quickly in these environments and can carry over into the real world.
These worlds provide a degree of control to individuals – control over their age, their gender, their appearance and their setting – that enables escape and fantasy. Pure curiosity, and the desire to explore and to create, causes many to visit – and often stay.

To understand why it is so immersive, we must first understand the concept of the avatar, the figure (image at right) which users select or design to represent them in these environments (think: user ID come to life).

Avatars make these Virtual Worlds much more similar to the real world than the digital 2D environment of the Internet. With a body in this environment, avatars interact by the same non-verbal cues of real life – moving closer to someone for a conversation, turning away when the conversation is closed, nodding (and sometimes jumping) in agreement, etc. Avatars also make issues of behavior / netiquette more acute. On the other hand, the pseudonymity of being present through the avatar makes some people more confident: for example, more comfortable asking questions in a course or meeting.

Edward Castronova's book Synthetic Worlds(2005), viewed as a classic by many in the industry, places social issues of Virtual Worlds within a historical framework of immigration. Castronova argues that when these worlds provide a more compelling world than the real one, history shows that there will be migration. Today, extreme users of Second Life can be viewed as early indicators of this trend.

3) ENTERPRISES AND VIRTUAL WORLDS

Many enterprises have set up a home inside Second Life, exploring ways in which Virtual Worlds may change how we do business. These worlds are proving to be entrepreneurial environments. An estimated 200 companies have been created which are dedicated to delivering services within Second Life. Combined they currently employ over 3000 people globally, with estimated annual sales of $60 million (source: Linden Labs). For many enterprises, the first venture into Second Life is often a store built for marketing and branding purposes; however other key areas of enterprise exploration are:

Education and Training – The immersive virtual environment is extremely conducive for teaching, from language to tech training and on-boarding. There are currently hundreds of educational sites within Second Life, and over 2000 participants in their dedicated education community. The area of Serious Games, whether within Second Life or within stand alone metaverses / MOLE (multiple online learning environments), will continue to develop and grow.

Communication and Collaboration – For many, Second Life presents a very attractive alternative to conference calls and video conferences. Enterprises already regularly use SL for meetings, conferences and connecting dispersed teams. For example, we have been using SL for weekly cadence calls with a large global client and the dispersed team, and have seen consistently good results – time is used very effectively, and participants are more relaxed and open. This potential will increase with the recent test launch of integrated audio and voice capabilities on Second Life.

Sales - Many consumer goods, automotive, media and financial services firms (from Nissan to Adidas, from Swiss bank BCV to Reuters, from the BBC to Harvard University) are exploring Second Life as a new channel for sales, customer relationships, teaching and media distribution. From building islands to promote recording artists, to launching a new car simultaneously in the real world and SL, to customizing a shoe in SL to be bought in the real world, these organizations are pioneering the medium. However, to quote a major retailer, “it’s too early to know what will work”. Technology companies are also exploring the medium for corporate sales and services. IBM is a leader in this area, having recently opened a new Virtual Business Centre which experiments with Virtual Worlds as a sales channel. The ability to work with a client in a visual and immersive environment, will only be an advantage as products and services get more complex.

Innovation – Companies are using SL to test and develop products. Starwood Hotels, for example built a new concept hotel within SL as a test environment before their real world launch of Aloft Hotels, using the SL members' feedback to refine their plans before starting construction and franchising (after which Starwood donated its virtual SL hotel to a non-profit youth organization).

4) WHAT'S NEXT?

Virtual Worlds will be constrained by technology and acceptance for the foreseeable future. However, environments such as Second Life are moving and evolving so fast that “checking in” every six months or a year is no longer enough.

Virtual Browsers - Many participants predict the introduction of a “virtual browser” as the next breakthrough, allowing avatars and their assets to move easily between virtual worlds. The underpinning technologies will become more widely available, encouraging enterprises to build their own virtual worlds – adding to the spectrum of virtual innovation.

Ubiquity – Like other technologies that are fundamentally about communication, Virtual Worlds will need to go through a series of standard phases – from “Wow, you have an avatar?”, to “I have an avatar too”, to “You still don’t have an avatar?”. When there is a critical mass in a given community, then the benefits of communicating or collaborating within a world such as Second Life will be much more evident.

Confluence – When your avatar flies through Second Life (or when your mouse maneuvers through Street View, a recent feature introduced on Google Earth) you can’t help thinking – what if?
What if the next generation of technologies could allow the ultimate mash-up of Google Earth and Second Life – allowing our avatars to stroll down a real time Broadway on their way to the movies? The combination – whether a Google Life or a Second Earth or another similar entity - could be the ultimate enterprise in Virtual Worlds.

» Second Life News for October 9,2007 from The Grid Live
An interesting post on the Second Life blog tonight called Lights on at the Lab In which ginsu asks, is anyone doing it better, in reference to the problems that Second Life has, and asks if anyone has any better examples of corporate transparency, who... [Read More]

Tracked on October 09, 2007 at 05:52 AM

» Second Life: virtual worlds and the enterprise from Putting people first
Susan Kish, vice president of the network and community practice at XING, has posted a long essay on how enterprises should look at Second Life and, more generally, at virtual worlds.
Is the topic still too early or too distracting from R... [Read More]

Tracked on October 09, 2007 at 10:19 AM

Comments

Great post.

This is a good primer for just about any corporate wonk beginning to consider the impacts of social media and virtual worlds, potentially even as good first time intro to those that have not had any indoctrination.

I was among the merely curious, faintly interested in whether anything "spiritual" might be happening in SL. Found myself moved and enchanted by a prayer service in SL in which fellow worshippers from New Zealand to the UK prayed with me for personal concerns. Thanks for this post. I've shared it with my friends. I'm sure it'll make the rounds in SL -- at least among Anglicans! : )

SL is an overhyped (2006 to beginning of 2007 in mass media) failure. There won't be a lot of business activity long-term because there won't be a lot users.

People should instead study massive multi-parallel games (such as WOW or console-based online games with Avatars) or simple browser games (such as Hattrick or Flash Ganes) - these are far more successful.

SL doesn't have high long-term attachment rates (because there is no focused gaming experience) and will therefore fail in the mass market - same goes for Sony's upcoming Home.

SL is actually a drawback vs. hypertext, blogging and other w2.0 widgets whose points are to exchange a maximum of social information with a minimum of cost. SL is very "costly": search is difficult since it mimicks human world - and internet / web 2.0 was basically set up to free up more information that couldnt be exchanged in "normal life". So, as a portal/main platform of information exchange, SL has no future (and actually defeats the purpose of the internet).
As an entertainment destination, it's another story - but anecdotal evidences of high churn points to a lack of a "killer app" at this stage. I wouldnt discount it though - there might be some interesting applications in simulation training (for professional or personal reasons) and the entertainment experience might be enhanced if it was maybe a little more structured.

There are two things about SL web and the Internet that should be cleared up here:
"Second Life can not be looked at in isolation, or you will miss where it’s going. Our emerging future will include three separate kinds of “worlds” – the Real World, the Digital World (2D Web, Internet), and the Virtual World (3D Web)."

We can speak about three different worlds but distinction here is a bit wrong. 2D web and Internet are not the same thing. Internet is also an email, and IM's and, after all, SL. And "third world, is also digital and a part of the Internet. Also, it is not a wise move to call virtual worlds web at this moment. Web is called "web" because of all those links that interconnects it into one huge scheme of data. Unfortunately, we don't have such interconnectivity inside virtual worlds. Not yet, anyway.

Other thing is:
"SL and other virtual worlds have demonstrated the potential to become the next generation of interface for connections, content, and collaboration – effectively the post-Web platform of choice – taking the 2D internet and transforming it to a 360-degree 3D experience."

Second Life is not the next web as many love to say for marketing, hyping or any other purposes. Those two are very different by their nature and also, by their aim. Some things are just meant (and easier and more natural) to be done in two dimensions. One should be crazy to want to surf the web with an avatar looking in the computer screen rendered on the real computer screen. Those are two different worlds... two different tools. Each has its own in a way that complements each other. This issue is more discussed here: http://metaverse.acidzen.org/2008/is-the-second-life%E2%84%A2-the-next-web

I have to disagree with Marc:
"SL doesn't have high long-term attachment rates (because there is no focused gaming experience) and will therefore fail in the mass market - same goes for Sony's upcoming Home."

SL does have long term attachments rates. Actually, I know a lot of people (myself included) who spent there more than a year (which is a double of estimated attachment to regular game) and whose involvement signs they will stay for a quite more time. You are talking about focused gaming experience while SL is not a game. It can be a gaming platform but, as Susan pointed, it is more social space than a game. SL doesn't have problem with people staying once they really get into it. It has a problem to get people hooked up. There are lot of reasons for that though.

Julia, you are right that SL is a bad thing for information exchange as we got used to web and web 2.0. But there is also other way to exchange information - direct, personal one. And there SL does its job. Once again, it complements web, not fighting it.

@Susan : thanks for this comprehensive intro on Virtual Worlds. Very useful for those of us who still have to understand and/or investigate what are the possibilities offered by SL and the likes beyond their initial purpose(s). Remember Twitter ?...